Futures contracts help us hedge against these if we think the spot rate will decrease.
What are receivables?
100
This is the type of forecasting used when we only look at historical spot rate movements.
What is technical forecasting?
100
This type of exposure analyzes movements in exchange rates in relation to individual transactions.
What is transaction exposure?
100
This gives the buyer the right to sell a currency at a future date, but the buyer can let it expire.
What is a put option?
100
In relation to currency movements, a high standard deviation results in this.
What is higher volatility in the movement of the currency?
200
Futures contracts help us hedge against these if we think the spot rate will increase.
What are payables?
200
This is the type of forecasting used when we use the current spot rate as the prediction for the future spot rate.
What is market-based forecasting?
200
Transaction exposure could be considered a sub-category of this type of exposure.
What is economic exposure?
200
These types of contracts have obligations built in.
What are forwards and futures?
200
The longer the time frame for currency changes, the higher this is.
What is the volatility?
300
This describes an over-the-counter transaction that would help hedge against exchange rate fluctuations.
What are forward contracts?
300
This is the type of forecasting we use when we analyze various economic factors.
What is fundamental forecasting?
300
Analyzing the outcome of a foreign currency appreciating before a company has to pay the foreign company relates to this type of exposure.
What is transaction exposure?
300
This is the calculation of a premium or discount on a forward contract.
What is (F-S)/S -1?
300
This is true when two currencies have a correlation coefficient equal to 1.
What is highly correlated? What is a 1:1 relationship?
400
These are traded on the Chicago Mercantile Exchange.
What are futures contracts?
400
This type of analysis can be used to develop different outcomes for different scenarios in an attempt to reduce some of the uncertainty associated with forecasting.
What is sensitivity analysis?
400
This is the calculation of net cash flows.
What is cash inflows minus cash outflows?
400
This is attached to a forward contract when the forward rate is higher than the spot rate.
What is a premium?
400
This is the type of relationship two currencies have if they have a negative correlation coefficient.
What is an inverse relationship?
500
The present exchange rate is equal to the strike price.
What is "at the money"?
500
This type of analysis can be used to develop ranges in which a spot rate can fall in order to reduce some uncertainty related to forecasting.
What are interval forecasts?
500
This is the risk that changes in a foreign currency will change the value of balance sheet or income statement items.
What is translation exposure?
500
This is the calculation to find a forecast error.
What is (forecast - actual) / actual?
500
Differences in accounting methods can cause this type of exposure.